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#ASX Announcements
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Added 3 years ago

Little glimpses of improvement... might COE be on the cusp of some sustainable performance delivery...

Operations update

• Stable processing rates at the Orbost Gas Processing Plant in August – average processing rate of 41 TJ/day (Q4 FY21: 33 TJ/day)

• Sole gas sales continued at maximum daily contract quantities in August – average gas sales volume of 59 TJ/day (Q4 FY21: 54 TJ/day)

• Athena Gas Plant commissioning commenced – sales gas introduced into the plant

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#ASX Announcements
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Added 3 years ago

Serial under-performer Cooper announced results today.  It might be possible that they are starting to get on top of things and with a gas price likely to rise, there might be light at the end of the tunnel.

 

  • Record sales and revenue: sales volume up 94% to 3.01 MMboe; revenue up 69% to $132 million

  • Record production: up 69% to 2.63 MMboe

  • Sole Gas Sales Agreements driving improved gas returns: ~$50 million cash margin from the Otway and Gippsland basins1; Sole cash margin kept broadly whole2

  • Strong second-half momentum to continue: expect material growth in FY22

    • –  Sales volume guidance of 3.7 – 4.3 MMboe (FY21: 3.01 MMboe)

    • –  Underlying EBITDAX guidance of $60 – 70 million (FY21: $30.0 million)

  • Athena Gas Plant commissioning in Q2 FY22: on schedule and on budget

  • Sound Balance Sheet maintained: debt adjustments finalised

  • Climate Active carbon neutral certification: independent audit and Australia’s first carbon neutral oil and gas producer

  • Crystalising and growing the value within the existing portfolio: significant gas reserves position and gas prices increasing

  • Results webcast scheduled for 8.30am ACST (Adelaide) / 9.00am AEST (Sydney, Melbourne)

    Cooper Energy (ASX: COE) has announced record full-year production, sales volume and revenue. Commencement of the Sole Gas Sales Agreements (GSAs) and improving performance at the Orbost Gas Processing Plant (OGPP) helped drive a 69% increase in production to 2.63 MMboe, a 94% increase in sales volume to 3.01 MMboe and a 69% increase in revenue to $132 million.

    Earnings and cash flow in FY21 were impacted by OGPP processing rates, OGPP reconfiguration and commissioning costs, and impacts of the Transition Agreement with APA Group (ASX: APA). Underlying EBITDAX of $30.0 million (FY20: $29.6 million) and an Underlying Net Loss After Tax of $25.9 million (FY20: $6.6 million loss) were recorded.

    Managing Director David Maxwell said that despite a challenging year the strong momentum in the second half demonstrates Cooper Energy’s underlying value proposition.

    “FY21 was a year of two halves, with Orbost reconfiguration works and lower production in the first half and improving Orbost performance and higher sales volume in the second half.

    “Initiation of our Sole Gas Sales Agreements was a key milestone for Cooper Energy which delivered a material step-up in revenue and earnings in the second half.

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Valuation of $0.400
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Added 3 years ago
Feb 2019: 60c PT is based on Australian domestic (east-coast) gas demand vs supply over the next 5 years. Cooper (COE) and Senex (SXY) are two of the smaller energy plays with very good exposure to that theme, and I hold them both. 28-Jan-2020: Of the two, Cooper has done a lot better (and has already gone above my price target and now dropped back below it), but I still hold them both. More upside to come in my opinion. I'm raising my PT for COE today from 60c to 70c based on (1) a rebound in the oil price, (2) a further positive re-rating of this stock by the market based on the good news we already know about (massive increase in gas production to supply Australia's east coast), (3) further good news that I am expecting to emerge, and (4) possible positive M&A activity. That last one would just be a bonus if it occurs and my IT (investment thesis) is not dependent on it. 28-July-2020: Time to review this one. Done. Reviewed. Still holding and still think they'll get to 70 cps, but it might take a couple of years from here. A lot depends on APA and how quickly they can provide further improvements in Sole output through ongoing optimisation of operations at Orbost and other work they are conducting to take the plant to its nameplate capacity. In their latest update (on July 23rd, 2020) COE's MD said, “The timing of this will largely determine how large our growth in production, revenue and cash generation proves to be this year.” (regarding the APA optimisation and improvement work). Not great to have so much of your future profitability in the hands of another company, but APA know what they're doing with gas pipelines, pumps and plants, and they run them, so it's pretty much down to them to sort out the bugs and the bottlenecks. COE are going to fly, but "when?" is the question. It could happen pretty quick when it does happen (the positive re-rating), so I'm staying set in COE. I can afford to wait. 27-Jan-2021: 6 months on, I think $7 is still achievable, but it's going to take time. The market has continued to price COE at a discount (to their peers) due to their issues at the OGPP (Orbost Gas Processing Plant) that is operated by APA Group (APA). While those OGPP issues are clearly being worked through and commercial quantities of natural gas is now flowing through the OGPP to COE's customers, there is more work to be done clearly for the OGPP to be running at full capacity. Two years ago, COE were on the cusp of a game-changing year, and that explosive revenue and earnings growth has obviously been delayed because of the OGPP (that year was a fizzer). However the collaborative approach that COE and APA have taken (rather than fighting each other through the courts) is a real positive and has clearly worked to address and fix these issues in a far more timely manner than would otherwise be the case (if this was dragging through the courts). Legal recompense may still be an option down the track, but for now, both parties are solely focussed on getting that gas flowing to COE's customers at higher quantities with less foaming. The plant mods made so far have appeared to work well, with further mods planned. So the growth has simply been deferred, not lost. The market has however lost patience and lost interest. I have not. COE has huge upside potential, both as a standalone domestic natural gas supplier to the east coast of Australia, with gas being identified as the primary transitionary energy source as we move from traditional unsustainable fossil fuels for energy (electricity) production to a mix of renewable and sustainable energy solutions (wind, solar, hydro, pumped hydro, biofuels, etc. combined with large-scale energy storage solutions), and also as a potential target for a larger energy company to acquire. BPT (Beach Energy) is that natural acquirer of COE, when the time is right, for a number of reasons, including existing JVs between the two companies, adjacent tenements and adjacent producing fields, and that the entire COE (Cooper Energy) business would slot in perfectly to BPT's Cooper Basin business, with very clear synergies. To be clear, M&A is not a vital part of my investment thesis for COE, however it is in there because the potential for it is real and compelling. I have lowered my PT (price target) for COE from 70 cps to 55 cps because I think it is likely that COE will remain one of the more unloved energy plays on the ASX until they are completly on top of the OGPP issues and the earnings growth flows through to their bottom line results, and that could take another 12 months or even 18 months at a stretch. However, I do believe that 70 cps remains a realistic PT for a five year outlook, so by January 2026. [I do hold COE shares, in two of my RL portfolios, plus they remain on my Strawman.com scorecard.] 05-Aug-2021: Update: Lowering my shorter term (12 month) price target for Cooper Energy (COE) from 55 cps to 40 cps, as they've certainly lost the confidence of the market now, and while there is clear upside (they've been oversold), companies in this position do tend to take some time to get positively re-rated by the market. They have to have improved performance for a sustained period of time to win back confidence. There is plenty of upside, because they've reported that the average Sole gas production rate in July of 40 TJ/day, 21% higher than the Q4 FY21 average of 33 TJ/day due to improved performance at the Orbost Gas Processing Plant (OGPP), owned and operated by APA Group (ASX: APA). This follows cleaning of each absorber every two weeks (i.e. one absorber cleaned every week) to maximise the average production profile through winter. COE has also provided approval to APA for upcoming capital works at OGPP, as announced on 19 July 2021, designed to improve reliability and increase sustainable production rates. The scope of works agreed includes: • changing of the liquid distributor within each absorber to a spray nozzle to minimise foaming; and • installation of solids removal equipment to reduce the fouling from solid sulphur deposition within the absorbers. Significant testing has been undertaken at OGPP on solids removal technologies, with promising results delivered. Further information on the work program, cost and timing of the upcoming capital works will be provided in the coming weeks. The root cause analysis is continuing, with the objective of identifying the underlying cause of OGPP foaming and fouling. APA and Cooper Energy have engaged a specialist surfactant chemist to peer review the testing results and analysis previously undertaken. The surfactant chemist's scope of work is being overseen by a technical committee comprising APA and Cooper Energy representatives. Higher seasonal winter demand has continued with gas sales into the Sole Gas Sales Agreements (GSAs) currently at maximum daily quantities. Average sales volumes in July were 59 TJ/day, with OGPP processing shortfalls met through Cooper Energy’s back-up gas supply arrangements. All daily nominations from Sole customers continue to be met. And that's just their Gippsland Basin gas. They also have their Otway Basin production. Their latest operational and financial update can be accessed here: https://www.cooperenergy.com.au/Upload/Documents/AnnouncementsItem/FINAL-ASX-release---Operational-and-financial-update_1.pdf I continue to hold COE in two of my 4 real life portfolios and they are also in my Strawman.com portfolio. I'm underwater on them currently, but not selling because I reckon we're at or very close to the bottom in terms of their share price decline. I know why they're out of favour with the market. They've had significant production issues at Orbost (the OGPP) and now that those issues are being sorted out for good, I believe there is a recovery coming. Senex Energy (SXY) and Cooper Energy (COE) remain my preferred ways to play increased demand for natural gas in Eastern Australia. I believe increased demand and limited supply will feed into higher prices and those two companies will benefit from those higher gas prices.
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#Quarterly Reports
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Added 4 years ago

19-Apr-2021:  Q3 FY21 Quarterly Report

Key features

  • Record quarterly production and sales volume: 46% production increase to 0.77 MMboe and 55% sales volume increase to 0.82 MMboe from increasing Sole production
  • Record quarterly revenue: 46% increase to $35.9 million from commencement of the Sole Gas Sales Agreements
  • Improving performance of the Orbost Gas Processing Plant: 42 TJ/day average processing rate in March 2021, up 63% from the prior quarter*; further increases expected during CY2021
  • Extension of Transition Agreement with APA to 1 May 2022: working together to increase processing rate at the Orbost Gas Processing Plant with the objective of achieving nameplate capacity of 68 TJ/day
  • Athena Gas Plant Project on schedule and on budget: ~65% complete at quarter-end
  • FY21 guidance maintained: Production: 2.7 – 2.9 MMboe; sales volumes: 2.9 – 3.1 MMboe

* Processing rates exclude downtime for reconfiguration works in Q2 FY21.

Comments from Managing Director David Maxwell

“Cooper Energy re-set its baseline performance during the quarter, delivering record quarterly production, sales volume and revenue.

“Improved performance from the reconfigured Orbost Gas Processing Plant underpinned our record results. Daily Orbost processing rates reached 45 TJ/day and stability improved, albeit with periodic absorber cleans still required. Ongoing plant operating improvements and capital works in FY22 have the objective of achieving further production increases and extending cleaning cycles.

“Commencement of the Sole Gas Sales Agreements in December 2020 and January 2021 was a major milestone which contributed to record quarterly performance. Sole sales revenue increased ~200% quarter-on-quarter due to higher sales volumes and less Sole gas sold on the spot market.

“Cooper Energy continues to execute its gas development strategy in a disciplined manner. With improving performance at the Orbost Gas Processing Plant and increasing cash flow, we are well positioned to continue growing gas supply for the southern markets from our Otway and Gippsland basin acreage,” Mr Maxwell said.

[Click on the link at the top for the full report.  I hold COE shares.]

Also, lately:

12-Apr-2021:  Transition Agreement Extension

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#H1 FY2021 Results
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Added 4 years ago

15-Feb-2021:  Half Year Results Announcement

Plus:  Half Year Results Presentation   and   Half Yearly Report and Accounts

COE has been doing it tough over the past year, which has little to do with COVID, and everything to do with their issues with getting their Sole gas through the Orbost Gas Processing Plant (OGPP)

While they have certainly now turned the corner with that issue and are working through both the temporary and permanent fixes for it amicably enough with APA (the operators of the OGPP), they had a rough H1.  Despite that, they're looking to the future, and are accentuating the positives, as you do:

Step-change in production underway

  • Record half year production and sales volumes on increased Sole production: Production up 82% to 1.20 MMboe and sales volumes up 86% to 1.21 MMboe (Million Barrels of Oil Equivalent)
  • Earnings impacted by Orbost (OGPP) performance: Underlying EBITDAX down 40% to $9.7 million; underlying net loss after tax of $17.4 million (H1 FY20: $2.0 million loss)
  • Transition Agreement with APA enabled Sole gas sales agreements to commence: Contracted gas volumes of 19.75 PJ in 2021 delivers step-change in production, revenue and cash flow
  • Orbost reconfigured for greater operational flexibility: ~45 TJ/day since February 2021
  • Step-change in gas production: Current total gas production rates of ~60 TJ/day, up ~60% on H1 FY21 average daily rate
  • Strong growth forecast: FY21 production 2.7 – 2.9 MMboe (FY20: 1.56 MMboe) and sales volume 2.9 – 3.1 MMboe (FY20: 1.54 MMboe)
  • Net zero carbon emissions: First domestic oil and gas producer to be carbon neutral
  • Growth projects on schedule: Athena Gas Plant >40% complete with first gas expected in Q1 FY22

--- click on the links at the top for more ---

[I hold COE in two of my portfolios, and they are also on my Strawman.com scorecard.  I see them as undervalued by the market based mostly on a temporary setback, so I see upside once they get the gas flowing properly [consistent high volumes, no regular stoppages] through APA's OGPP.  It is in the interests of both parties [COE + APA] to sort this out, and all information I read suggests that they are doing just that, hence the upside once the good news flows along with the gas.]

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#Quarterly Reports
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Last edited 4 years ago

30-Oct-2020:  Quarterly Activities Report

Key features:

  • Quarterly production: up 10% to 0.67 million boe from prior quarter’s 0.61 million boe (barrels of oil equivalent).
  • Quarterly revenue: maintained from prior quarter at $24 million.
  • Sole: Orbost single absorber trials completed. Commitment to plant reconfiguration works.
  • Sole Gas Supply Agreements initiated: to commence from December 2020 and January 2021.
  • Athena Gas Plant Project: FID taken and project is 17% complete.
  • Carbon neutral in FY20: formal certification underway.

Managing Director’s comments:

“Our results show good progress made against our task list for FY21.

"The August Transition Agreement with APA led to successful single absorber trials, commitment to plant reconfiguration works and preparation for the initiation of the Sole gas supply agreements from December. FID has been taken on the Athena Gas Plant Project, which is now underway and first gas is expected in under 12 month’s time. Our gas production and revenue has continued to grow notwithstanding the lower spot gas prices.

“The achievement of Carbon Neutrality for our operations in FY20 was the culmination of extensive research and engagement with shareholders and carbon offset project providers. We are delighted to achieve carbon neutrality through a high-quality domestic project with long term benefits to a region of major environmental significance. We are now working with the relevant bodies to secure formal certification of this status.

“The coming months are expected to see the pace of activity pick up as Orbost plant works are conducted, then Sole production resumes and we initiate the Sole term gas sales contracts”.

--- click on link above for the full report ---

Also today:  (30-Oct-2020)  COE: Sole GSAs commencement and Orbost plant work commitment

These links are to today's announcements via Cooper Energy's own website:  https://www.cooperenergy.com.au/investor-information/asx-announcements

[I hold COE shares.  They are trading at a decent discount to their peers due to the issues they are having with the Orbost Gas Processing Plant (OGPP) which are addressed in today's announcement.  As I have stated before, the issues are temporary IMO, not structural, and it is in the interests of both APA (the operators of the OGPP and the associated gas transmission pipelines) and COE to get this sorted ASAP.  I view both SXY (Senex Energy) and COE (Cooper Energy) as excellent exposure to increasing Australian east coast and south east coast Natural Gas demand, which should lead to higher prices over time, so I hold both.  I view COE as the bargain stock in the sector due to their current OGPP issues.]

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#Company Updates
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Added 5 years ago

19-June-2020:  Sole Orbost Update 19 June 2020

APA have advised COE of some issues with the commissioning of the Orbost Gas Processing Plan which will result in another 6 day shutdown - starting tomorrow or Sunday - and that the plant may need further modification - which could take up to 3 weeks (offline). 

I hold COE shares and I view these issues as temporary, not structural.

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#Company Reports
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Added 5 years ago
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#Business Update
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Added 5 years ago

31-Mar-2020:  Business Update

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#Company Updates
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Added 5 years ago
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#Company Presentations
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Added 5 years ago
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#Catalysts
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Last edited 5 years ago

06-Sep-19:  New gas field discovery at Annie

As expected, that has been a positive catalyst for COE.  They closed up 6% at 62 cents on that news, but traded today as high as 68.5 cents, some 17% above the 58.5c they closed at yesterday.

While the discovery of new commercial gas deposits is always a nice surprise, they were drilling between two currently producing gas fields - so not a total surprise that they found gas there.  

I'm a happy owner of COE - which have good management - and provide excellent exposure to Australian domestic east coast gas demand.

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#ASX Announcements
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Added 5 years ago

18-Feb-2020:  Sole Gas Project update

I hold COE shares.  This is a game-changer for COE.  Not long now!  Good exposure to Australian east coat natural gas demand.  Good management.  Smaller player, becoming bigger. 

Pendal (the old BT / Bankers Trust) became substantial holders of COE shares on Feb 10.  Other current substantial shareholders include Mitsubishi UFJ Financial Group (who bought the Colonial First State Global Asset Management [CFSGAM] business from CBA and have now rebranded it as First Sentier Investors), Greencape Capital, CBA and Challenger (ASX:CGF).  There's some smart money on the register.  Their MD, David Maxwell, owns over 22 million COE shares, and every other board member is also a shareholder, with one (Hector Gordon) owning over 4m shares.  They have skin in the game.

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#Company Reports
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Last edited 5 years ago
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#ASX Announcements
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Last edited 5 years ago

17-June-2019:  Sole Pipeline Update

Sole Gas Project Update    

  • Pipeline repair and pipeline testing activities complete 

 
Cooper Energy (ASX: COE) advises the offshore activities to undertake the repair and testing of the Sole subsea pipeline have been completed.  
 
The offshore component of the Sole Gas Project is forecast to be within the budget cost of $355 million.   Work on the onshore element of the project by APA to upgrade the Orbost Gas Plant to process gas from Sole is advancing.  APA have advised Cooper Energy that the plant will be ready to receive and process the first Sole gas in the September quarter 2019.  APA and Cooper Energy continue to work closely to ensure the safe and reliable completion of the Sole Gas Project. 

--- ends ---

 

Disclosure:  I hold COE shares.

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#ASX Announcements
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Last edited 5 years ago
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